China, MPA Sign Antipiracy Pact

In a move that could significantly impede China's rampant movie piracy market, the Motion Picture Association Audiovisual Entertainment for Global Audiences and China's Ministry of Culture (MOC) and State Administration of Radio, Film and Television (SARFT) have signed a memorandum designed to create a safe harbor for theatrical releases.

With nearly 95 percent of all home video product in China bootlegged and many movies available on DVD prior to their theatrical release, financial losses to U.S. studios run upwards of $280 million annually, according to the MPAA. Movie piracy in the entire Asia-Pacific region amounted to nearly $900 million last year.

Under terms of the agreement, a list of U.S. releases would be submitted to MOC and SARFT on a quarterly basis, and DVD copies of these titles found in the marketplace prior to the legitimate release date would be subjected to criminal copyright infringement prosecution in China.

“We are hopeful that this memorandum will benefit all film producers and distributors, and not just MPA member companies,” said Mike Ellis, SVP and regional director, Asia-Pacific MPA. “Piracy is a scourge that is badly harming the Chinese film industry as well as foreign producers and distributors.”

While the agreement makes no mention of pirated copies of films made available after the release date, it would be the first step toward curtailing an openly thriving black market of pirated U.S. films that Chinese government officials until recently have appeared indifferent toward stopping, according to Michael Murphy, editor of the California Technology Stock Letter and frequent visitor to China.

With China's entry into the World Trade Organization (WTO), there are legal boundaries in place for the prosecution and penalization of DVD copyright infringement.

He said halting DVD piracy in China wouldn't happen over night due to the fact that many bootleg operations have ties to government officials, including the military.

“The government knows who is doing this and may shut the most blatant offenders followed by the smaller ones,” Murphy said.

With implementation of effective antipiracy measures taking up to 10 years, Murphy said applying a hard line approach to piracy in China could lead to recalcitrant reactions from some government officials.

“China does want to move towards becoming a legitimate world trader, including updating their currency and internal laws,” Murphy said. “There is a genuine interest in making progress, it is just that they can't do it in a disruptive way, which affects employment or people's incomes. The last thing the government wants is people in the streets mad at them.”